Reporters are conflicted about inflation. On the one hand, they worry when indicators point to the possibility of future inflation. But on the other hand, when inflation is low, they are alarmed that retirees will be hurt by relatively small cost of living adjustments (COLAs) in Social Security.

It doesn’t seem to occur to them that if inflation is low, then the actual cost of living isn’t increasing substantially, so small "cost of living" increases are in order.

Media Research Center analysts reviewed stories since October, 1996 dealing with COLAs and inflation. They found a common theme: Small COLAs are universally reported as being bad news, even though a small COLA by definition means that inflation is low.

COLAs were in the news in December of 1996 when a congressionally appointed panel concluded that the Consumer Price Index (CPI) overstated inflation by about one percentage point per year. Since this means that the the actual cost of living hadn’t gone up as much as the government had thought, retirees’ COLAs had been too large for years.

Whom did the networks see as the victims in this situation? Workers, who had long paid too much in payroll taxes to support the artificially large COLAs? No, the networks focused on the "loss" to seniors.

"We begin tonight with money," said ABC’s Peter Jennings on the December 5, 1996 World News Tonight. "Maybe a little less for you, depending on who you are, and certainly a little more for Uncle Sam."

According to reporter Lisa Stark, in the story which followed, "One third of the federal budget is tied to the CPI, so cutting the official inflation measurement 1.1 percent would lower all government payments based on cost of living, saving the government a trillion dollars over the next twelve years." But, "cutting those payments would affect 60 million Americans, including seniors who stand to lose an average of $100 a year in Social Security."

Dan Rather, on December 5’s CBS Evening News, had a similar take on the proposal: "A plan officially proposed in Washington today could affect the incomes of millions of Americans, especially those older or at the lower end of the economic scale."

Reporter Ray Brady then told viewers that the average Social Security check "will rise from $724 to $745 a month in January, but it will rise to just $737, a difference of eight dollars, if the congressional commission has its way."

He also ran a soundbite from a Social Security recipient at a seniors’ center, who said: "For many people who come here, eight dollars a month is a big loss. That may be the only eight dollars they have to go to the movies."

This is an interesting definition of "lose." Seniors would no longer receive COLAs in excess of increases in the actual cost of living, therefore they would "lose" money. The same logic guided network reporting on COLAs this month, as the federal government came out with next year’s COLA for Social Security.

ABC’s Lisa McRee, sitting in for Jennings on the October 16 World News Tonight, reported what she called "some bad news for those already retired. The government says next year’s cost of living increase for Social Security checks will be just 2.1 percent. Now that’s the smallest rise in a decade because of the low rate of inflation."

According to NBC’s Tom Brokaw, on the October 16 Nightly News, it was "jarring news for senior citizens" that "their cost of living increases will amount to peanuts this year, just 2.1 percent; that’s the lowest in a decade."

And Eric Engberg, on the same night’s CBS Evening News, called the increase "the smallest in a decade" and "unwelcome news for many of the 44 million people who receive benefits." He argued that "the small size of the benefits increase may crimp people living on Social Security."

None sought to explain how a larger increase tied to a higher rate of inflation (i.e., a higher cost of living) would have been any different for retirees. If the cost of living adjustment is tied to the cost of living, then retirees’ standards of living shouldn’t change regardless of the size of the COLA. (Engberg, at least, pointed out that the small COLA is "also a sign of reduced inflation, which is good news for the overall economy.")

It’s not that reporters like inflation. As MediaNomics reported in April, the networks (incorrectly) saw an ominous threat of inflation in reports of strong economic growth and low unemployment.

"It’s been two years now since the Federal Reserve raised short- term interest rates in this country," worried Brokaw on the March 25 Nightly News. "The stock market has been booming; well, maybe booming a little too much."

ABC was so concerned about inflation that it devoted two long stories on that evening’s World News Tonight to the threat of price hikes. Peter Jennings reported that "the chairman of the Federal Reserve Board made good on his threat to raise interest rates if, in his view, the economy was in danger of overheating."

ABC correspondent Aaron Brown then argued that "consumer spending has been strong for two straight quarters; that sort of increased demand can lead to higher prices. Businesses need more workers to meet that demand and may have to pay higher wages to get them. Unchecked, that’s a prescription for inflation."

In the next story, correspondent Robert Krulwich further outlined the theory that unemployment emboldens workers to demand higher wages, which leads to higher prices. "Tradition says if I’m the boss of a company and my workers come to me and say, ‘Boss, we want a raise,’ if I know that there are thousands of people out of work in my town looking for jobs, I’m likely to turn to my employees and say, ‘Get lost,’ because I can replace them.

"But right now, the situation is quite different," Krulwich argued. "People are saying jobs are in general easier to get nowadays than anytime since 1992. So now if they say, ‘Boss, give us a raise,’ I’ve got to be more careful because some of them can leave me now and it will be harder for me to replace them, so I might just give them that raise." According to Krulwich, price hikes would naturally follow if there wasn’t a corresponding productivity increase.

This is the controversial Phillips Curve, which posits that economic growth and wage growth — not excessive money growth — ignite inflation. Reporters assume the Phillips Curve is accurate, in spite of increasing evidence that it isn’t, and that inflation is a monetary phenomenon. But, still, this assumption shows a concern in the media about the effects of high inflation.

So in other words, the economy simply cannot win. When inflation is high (or looks like it might increase), it’s reported as bad news, that the economy may be "booming a little too much." When inflation is low, and cost of living adjustments are, naturally, smaller, it’s reported as bad news, even "jarring news" that threatens to "crimp" senior citizens reliant on Social Security.

Reporters cannot have it both ways. Either inflation is bad or it isn’t.

— Rich Noyes